Vol. 149, No. 13 — July 1, 2015
SI/2015-59 July 1, 2015
ENERGY SAFETY AND SECURITY ACT
Order Fixing the Day after the Day on which this Order is made as the Day on which Certain Provisions of the Act Come into Force
P.C. 2015-845 June 18, 2015
His Excellency the Governor General in Council, on the recommendation of the Minister of Natural Resources, pursuant to subsection 119(1) of the Energy Safety and Security Act, chapter 4 of the Statutes of Canada, 2015, fixes the day after the day on which this Order is made as the day on which sections 2 and 7, subsection 8(1), section 13, subsections 14(1), (2) and (4), sections 15 and 16, subsection 17(1), sections 18, 28 and 37, subsections 52(1) and 54(1) to (3) and (5), sections 55 and 57, subsection 58(1), sections 59, 69 to 71, 77 and 87, subsections 88(1) and 90(1), (2) and (4), sections 91 and 93, subsection 94(1) and sections 95 and 104 to 116 of that Act come into force.
(This note is not part of the Order.)
This Order in Council, made pursuant to section 119 of the Energy Safety and Security Act (the Act), which received royal assent on February 26, 2015, fixes the day after the day on which this Order is made as the day on which certain sections of the Act come into force.
The Government of Canada is committed to responsible development of offshore oil and gas resources and protecting the safety and security of Canadians and the environment. Offshore oil and gas development will not proceed unless rigorous environmental protection measures are in place. These goals are part of the Government’s plan for responsible resource development, which also aims to create high-quality jobs, economic growth and long-term prosperity for all Canadians.
Part 1 of the Act amends the Canada Oil and Gas Operations Act (COGOA), the Canada Petroleum Resources Act (CPRA), the Canada-Newfoundland and Labrador Atlantic Accord Implementation Act, and the Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation Act (the Accord Acts) to increase the level of transparency of Canada’s offshore and frontier oil and gas regime, and update and strengthen spill prevention, response and liability in Canada’s offshore.
The objective of this Order is to bring certain provisions of the Act into force, namely:
- Sections and subsections 2; 8(1); 14(1), (2), and (4); 15; 16, 17(1); 18; 28; 37; 52(1); 54(1), (2), (3), and (5); 55; 57; 58(1); 59; 70; 71; 88(1); 90(1), (2), and (4); 91; 93; 94(1); 95; and 109, which provide the authority for the use of spill-treating agents (STAs) under COGOA and the Accord Acts;
- Sections 7 and 13, which provide the National Energy Board (NEB) with authorities to perform its duties and functions as a responsible authority under the Canadian Environmental Assessment Act, 2012 (CEAA 2012) for projects under COGOA;
- Sections 77 and 87, which provide the Canada-Nova Scotia Offshore Petroleum Board (CNSOPB) with the authorities required to be made a responsible authority under CEAA 2012 for projects under the Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation Act (the Canada-Nova Scotia Accord Act); and
- Sections 69, 104–108 and 110–116 which repeal certain obsolete sections of the Accord Acts.
Part 1 of the Act, except for sections 117 and 118, will come into force one year after the date on which it receives royal assent, unless the Governor in Council sets the coming-into-force date earlier by Order in Council.
The COGOA, the CPRA and the Accord Acts are the legislative frameworks for the management of oil and gas development in Canada’s offshore. The Accord Acts established the CNSOPB and the Canada-Newfoundland and Labrador Offshore Petroleum Board (CNLOPB) and made them responsible, on behalf of the federal government and each respective provincial government, for the regulation of oil and gas development in Canada’s Atlantic offshore. The federal government made the NEB responsible for administering the COGOA and parts of the CPRA on its behalf.
1. Authority for the use of STAs
STAs are substances that can be applied following an oil spill to control the path and mitigate the effects on the environment. “Spill-treating agent” is a generic term which includes dispersants, herding agents, emulsion treating agents, solidifiers, bioremediation agents, and surface-washing agents. As an example, an effective dispersant is one that rapidly and comprehensively transfers oil from a slick at the surface down into the water column as small droplets. The deposit of those STAs that are deleterious into Canadian waters is potentially prohibited under a number of federal environmental statutes, including the Migratory Birds Convention Act, 1994, the Fisheries Act and the ocean disposal provisions of the Canadian Environmental Protection Act 1999 (CEPA 1999).
The Act (a) grants authority to the NEB, the CNSOPB and the CNLOPB (collectively, the Boards) to authorize the use of STAs, where appropriate, in response to incidents from offshore oil and gas activity under certain conditions; (b) authorizes the Minister of the Environment to make regulations establishing a list of STAs acceptable for use in Canada’s offshore; and (c) in the event of an oil spill, lifts the legal prohibitions that would otherwise prevent the use of an STA under five conditions. The Act also allows the Minister of the Environment to establish conditions for and authorize the use of an STA, oil or oil surrogate for research purposes in offshore areas subject to COGOA. In the joint management offshore areas, the provincial Minister must also approve the conditions for, and the authorization of the use of an STA, oil or oil surrogate for research purposes.
The STA-related provisions brought into force as a result of this Order will allow the use of STAs on the conditions that
- the STA is listed in regulations made by the Minister of the Environment;
- the use of the STA is included in the operator’s contingency plan (i.e. the document outlining the operator’s plans to address various possible offshore incidents, including an oil spill);
- in response to a spill, the responsible Board’s Chief Conservation Officer determines that its use is likely to achieve a net environmental benefit in the particular circumstances of the spill and approves the use of the STA;
- the STA is used in accordance with conditions set out in any regulations to be developed within five years and any other conditions stipulated by the Chief Conservation Officer at the time of the spill (e.g. areas where the use of STAs are not permitted); and
- the Chief Conservation Officer consults the Minister of the Environment at the time of a spill, during the five-year transition period during which STA conditions of use regulations are to be developed.
2. Authorities for the NEB to act as a responsible authority under CEAA 2012
Under CEAA 2012, the NEB is the responsible authority for designated projects that it regulates under the National Energy Board Act or under the COGOA. The Act clarifies that the NEB’s authorities to perform its duties and functions as a responsible authority under CEAA 2012 exist under the COGOA.
3. Authorities for the CNSOPB to be made a responsible authority under CEAA 2012
The Act also provides the CNSOPB with the authorities to be made a responsible authority under CEAA 2012 so that the environmental assessment requirements of CEAA 2012 and the regulatory review requirements under the Canada-Nova Scotia Accord Act are met by the CNSOPB through a single process.
The Act provides the CNSOPB with the authority to establish a participant funding program and to hold public hearings. The Act also establishes a timeline of 12 months for the CNSOPB to complete environmental assessments under CEAA 2012, once it becomes a responsible authority.
With these provisions in place, new regulations (the proposed Federal Authority as a Responsible Authority for Designated Projects Regulations), subject to Governor in Council approval, would also be required to make the CNSOPB a responsible authority under CEAA 2012 for projects it regulates under the Canada-Nova Scotia Accord Act. Amendments to the ministerial Regulations Designating Physical Activities, once made, would transfer responsibility for prescribed offshore oil and gas activities from the Canadian Environmental Assessment Agency to the CNSOPB.
4. Repeal of outdated provisions in the Accord Acts
Canada’s current oil and gas regime was first established in 1985 with the entry into force of the COGOA and the CPRA, followed by the signing of the Atlantic Accords between Canada and Newfoundland and Labrador (N.L.), and Canada and Nova Scotia (N.S.). There has been no major update to the offshore oil and gas regime since it was introduced almost 30 years ago.
The Canada–Newfoundland and Labrador Atlantic Accord Implementation Act requires that Canada report on fiscal equalization offset payments. The Act provided for fiscal equalization offset payments by Canada to N.L., to compensate the province for part of the reduction in fiscal equalization entitlements resulting from offshore revenues. This provision provided N.L. with compensation for a period of only 12 years, beginning when the cumulative production in the Canada-N.L. offshore area reached 15 million barrels of oil or the equivalent. The offset payments were triggered in 2000 by the Hibernia offshore project and continued until March 31, 2011, at which point the payments under this provision ceased (the 12-year period ended). As a result, there is no longer a need to report on these payments.
Similarly, the Canada-N.S. Accord Act required that Canada report on fiscal equalization offset payments and the Canada-N.S. Development Fund. Canada paid fiscal equalization offset payments to N.S. to compensate the province for part of the reduction in fiscal equalization entitlements resulting from offshore revenues. This provision provided N.S. with compensation for 10 years, beginning when daily production in the Canada-N.S. offshore area reached four million cubic metres of natural gas or the equivalent. The offset payments were triggered, in 1993–1994, by the Cohasset Panuke offshore project and continued until March 31, 2002. In 2001, N.S. indicated it would seek offsets not through the Accord Act, but instead through other federal arrangements that do not need to be reported under section 231 of the Accord Act.
The Canada-N.S. Accord Act also established the Canada-N.S. Development Fund, which was a $200-million fund to assist N.S. with infrastructure costs directly or indirectly relating to the exploration for or development, production or transportation of oil or gas in the offshore area. The Fund’s final disbursement was made in fiscal year 2010–2011, and the Fund was closed as of January 31, 2011. As Canada no longer makes fiscal equalization offset payments and the Fund was fully expended in 2011, there is no longer a need to report on these contributions.
The provisions that are the subject of this Order are being brought into force at this time, for the following reasons.
In order to enable a spill response regime which has been enhanced by the acceptable use of STAs, the STA-related provisions of the Act must first come into force. Bringing the STA-related provisions of the Act into force now ensures that the Boards have all the response measures available to them in the event of a spill or incident. Bringing these provisions into force now also provides certainty for the oil and gas sector with respect to the use of STAs. Furthermore, bringing these provisions of the Act into force now will provide the Minister of the Environment with the authority to establish STA-related regulations.
The provisions that provide the necessary authorities to the CNSOPB to allow them to be prescribed as a responsible authority under CEAA 2012 are being brought into force at this time at the request of the Government of Nova Scotia. These provisions enable the Minister of the Environment to propose to the Governor in Council new regulations under CEAA 2012 to make the CNSOPB a responsible authority.
Once in place, these Regulations would ensure that if a new oil and gas project is proposed, the environmental assessment requirements of CEAA 2012 and the regulatory review requirements under the Accord Act could be met by a single regulator through a single process.
The provisions of the Accord Acts that have become obsolete are being repealed at this time in order to ensure that unnecessary reporting does not have to be undertaken on the disbursement of fiscal equalization offset payments and payments from the Canada-N.S. Development Fund, both of which no longer exist.
To fulfill these reporting requirements, Canada is required to develop a report to Parliament on or before December 31 and table it in Parliament no later than 15 days on which the Parliament is sitting after the report is prepared. Drafting the report takes one government official approximately five days, and seeking the necessary approvals requires roughly two months for approximately 10 officials to review the report. This work is no longer required, but would have to be undertaken without the coming into force of sections 69 and 104–108 and 110–116 of the Act before February 26, 2016.
There will be no additional costs involved with bringing these provisions of the Act into force as a result of this Order.
During the development of Part 1 of the Act, the Government of Canada collaborated with the Governments of Newfoundland and Labrador and Nova Scotia. Multiple government departments from each level of government were involved. The implicated federal departments and agencies were: Aboriginal Affairs and Northern Development Canada, Environmental Canada, the Department of Justice, the Canadian Environmental Assessment Agency, the Boards, and Natural Resources Canada. The offshore oil and gas industry, academics and environmental non-governmental organizations (ENGOs) were also consulted during the legislative process. ENGOs have raised concerns about the use of STAs. These concerns will be addressed during the public consultation phase for the development of the regulations establishing a list of STAs acceptable for use in Canada’s offshore. The offshore oil and gas industry are generally supportive of these provisions.
For additional information, please contact
Natural Resources Canada
Offshore Petroleum Management Division
580 Booth Street